Analysis: Italy Sticking With Austerity Plan

According to a new analysis by LIGNET.com , Italy’s Senate passed an austerity package last week that signals Prime Minister Silvio Berlusconi’s commitment to implementing economic reform despite significant opposition and a general strike. Continued squabbling within the center-right governing coalition could still trigger a crisis, jeopardizing not only the economic package but the entire government. However, Berlusconi demonstrated his political acumen by winning the vote of confidence and passing the economic package.

The austerity package cuts government spending at all levels, increases the value added tax (VAT), raises the retirement age for women in the private sector, and taxes high income individuals. The package also stipulates stiff penalties for tax evasion, a serious problem in Italy. The day before the vote, Italy’s main labor union called a general strike against the plan, and protesters demonstrated while the Senate voted.

According to the LIGNET.com analysis, the austerity package is an important accomplishment for Italy and Berlusconi:

“Passage of the Italian austerity plan will reassure the EU and investors who worried that the plan was unraveling in the face of discontent within Berlusconi’s own party, other sectors of government, and the public. Berlusconi’s determination to pass the plan despite strident opposition shows his strong commitment to economic reform. The package is almost certain to pass the lower house, thanks to Berlusconi’s majority there, with little debate or change.”

Click HERE to read the full analysis of this story from LIGNET.com , a new Washington, DC-based intelligence analysis and forecasting service.